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Considerations for Purchasing Technology

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One of the biggest challenges facing corporate technology consumers today is how to acquire technology in the most economically sound way possible. While a school, corporation, or government entity will want to upgrade some of their current technology but not have enough capital or approved capital to make the exorbitant purchase, it still may be possible if they pay monthly for the use of these devices via a service agreement with a reputable AV integrator. This could even allow the client to use more advanced technology than they would have been able to afford otherwise.

Most clients tend to focus on the technology itself, but the better thing is to strategize is how to obtain modern devices you need at a price point and predictability you and the finance department can afford. It is not as hard as you might think

Financial Considerations for Purchasing Technology

Before a consumer signs on the dotted line for any type of technology agreement, there are some thoughts to keep in mind and talk over with all levels of your organization including the financial department. Some specific points of consideration for these parties include:

  • What means do you plan to use to acquire new technology?
  • Are you willing or able to finance it?
  • Are you willing or able to pay cash?
  • What type of return do you want for this particular expense?
  • Will the technology you plan to invest in quickly become obsolete?

An organization or corporation's answers to these questions can help guide them in exactly what kind of technology they want and by what means they should purchase it.

Expenditures 101

Clients that are on track to upgrade or buy new technology generally follow one of two tracks when it comes to expenditures:

  1. OpEx: Operating Expenditure
  2. CapEx: Capital Expenditure

Operating expenditures are basically monthly expenses that will appear on the profit and loss sheet. Because this expenditure is spread out over an extended time period at a predictable cost and is lower risk, it is generally much more appealing to financers. Examples of an operating expenditure might be a subscription that a company has with a provider such as Microsoft, Amazon, or Apple. It allows them to use the service on an as needed basis.

Capital expenditures tend to be less popular with a company’s finance leaders because it requires a quite large up-front investment. For this reason, this type of expenditure is difficult for both public and private enterprises to manage. Essentially, this method allows a user to acquire a fixed asset by paying cash or borrowed money on the front end in one large sum. The other part of a capital expenditure that can deter financial approval is the amount of groundwork it can take from coming up with the capital to getting budgetary approval to finding a funding source.

Typically, an operating expenditure will have more success for most corporations, schools, and even government entities.

Making Your Money Work for You When Technology Changes and Improves Every Day

The truth is that all technology is quickly becoming obsolete. This is generally true of every piece of technology that affects our lives. Why? Because technology is constantly improving at a rate so fast that the modern technology of today may be as good as obsolete in only a few years’ time.

For example, a study found that a ninety-eight-inch LED display depreciates significantly over a three-year time period. At the end of that time, the device will have likely depreciated by ninety-six percent.  This is a staggering statistic that indicates that at the end of three years, that display will only have retained four percent of its initial value, a whopping four hundred dollars.

All this to say that for a client today wanting modern technology, it simply makes more sense to use audio visual as a service so that in a few years’ time, they can reevaluate the tools they are using and potentially do a reasonable upgrade for about the same monthly payment as before.

The Benefits of Audio Visual as a Service

Audio Visual as a Service, more commonly referred to as AVaaS, has been around for a little while but is becoming somewhat of a new trend. Its popularity is due in large part to the fact that it allows a company to get the total tech solution they are hoping for and to pay for it gradually over time.

Some of the primary benefits of using Audio Visual as a Service are:

  • Establishes better use of cash flow. In other words, by doing this as an operating expense, it can save the client from spending a large amount of cash up-front. Instead, the client can hang onto their cash and invest in something else that could earn a significant return for their business because it is not recommended to fully invest in a rapidly depreciating asset with a capital expenditure. It is unnecessary to own the technology. Over a period of three years a client can use the technology and at the end choose to refresh it, potentially keeping it close to the same monthly payment they were already paying. Using AVaaS can keep a company from depleting their cash and therefore allow them to have more on hand for other unexpected expenses.
  • Preserves credit better. Most businesses do have a credit line so that if there is a purchase they need cash for, they can use it. However, this may not be the best way to finance a purchase if it can be avoided. AVaaS allows a client to preserve their credit while still letting the client access technology on an affordable monthly basis.
  • Manages risk more efficiently. One of the best ways to invest in technology is to pay for equipment as you are simultaneously generating a profit. This provides a more balanced return than paying with a huge lump sum of cash up front and not getting as good of a return in the future.
  • Streamlines budgeting. Corporate financial officers and departments like stable budgets and predictable spending because it reduces risk. By using AVaaS, it can help create a stable IT budget with predictable monthly spending over three years. And because it involves less risk, the operating expenditure usually presents less red tape to work through for approval.
  • Helps combat inflation. Today the world is seeing a period of high inflation in which many items are experiencing a huge price increase. The Consumer Price Index is higher than it has been in almost three decades, and it is affecting everyone’s pocketbooks. With no sign of inflation letting up in the foreseeable future, AVaaS can allow clients a hedge against inflation with predictable monthly payments.

It is possible to have technology and it be affordable in the same way it is for you have your cake and eat it too. Plan ahead, be smart and make your investment work for you.

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